Shifting paradigms in viewing our energy

By Hanan Nugroho

Indonesians have long been taught that their country is rich in energy resources.  Knowing the country once was an OPEC member, the world’s largest exporter of liquefied natural gas (LNG) and is now the largest exporter of coal, many Indonesians believe that their energy resources are plentiful when compared to other countries.

The comparison of energy resource wealth among countries, however, should take into account population figures. Using these per capita comparisons, our oil and gas wealth is smaller than that of Malaysia, Vietnam, Brunei, Timor-Leste — and very small when compared to the Middle East.
Even though Indonesia has recently been called the world’s largest exporter of coal (steam coal, in particular), for this energy resource, we actually are much poorer than the Australia, South Africa, China, India, the US and many other countries.
We are known as energy exporter because our per capita energy consumption is still quite low (about one-third of Malaysia’s, one-fifth of Japan’s, and one-seventh of Singapore’s), while energy exploited in this country is made available for export. As our energy consumption per capita approaches Malaysia’s rate, we will no longer be able to export our natural gas or other resources at current volumes.
We need to change the paradigm that we are rich in energy resources to a new one that says we are not that rich and that our energy reserves are barely adequate to meet growing domestic demand.
Many old paradigms in viewing our energy also need to change or to be put in better balance.
The belief that energy resources (raw material) are a major source of “direct and quick income” for the government must be changed to the idea that energy is merely a fuel to secure economic growth.
Energy should focus its role to provide fuel for domestic economic activities and create jobs, add value to domestic industries and develop the energy infrastructure needed to support the growing use of energy in domestic market. These activities, in turn, will be contributing revenue to the government in the form of taxes.
Since our energy resources are limited and are largely required to fuel our economic growth, we have to shift the export-oriented paradigm to secure energy for domestic requirements first.
Other paradigms that must be changed are on access to energy and energy conservation. The current electrification ratio is about 65 percent. More than 90 million peoples in this archipelago have not been connected to electricity. Aware that access to energy is still limited in this country, we are focusing our work to add to the energy supply and build infrastructure to increase access to energy for many consumers in the country.
As we add more to the energy supply, at the same time we need to pay more attention to its efficient use. The potential for energy conservation suggests that we must implement more energy conservation programs instead of increasing energy supply.
The additional energy supply must be given to those with no access to energy, particularly people in rural and remote areas rather than to those who have easy access to power in dense cities and urban areas.
On energy prices, we need to shift from the application of regulated pricing to the more liberalized pricing.  The long practice of regulating energy prices, combined with a large subsidy (for electricity and petroleum fuels in particular) has discouraged conservation as well as constrained programs to diversify our energy sources.
The wide practice of regulating energy prices sends the wrong signal on the economic value of the energy and products/services using them. It also increases the burden to the government for providing the subsidy fund.
Shifting is importantly needed from our heavy use of “black energy” to the greener one, from the old energy to the younger one, from large carbon content (dirty) to the lesser/cleaner one.
The world, particularly the developed countries, is busy to prepare for the coming of low carbon or green economy society, where green energy (renewable and efficient use of energy) will be playing major role to fuel the new economy.
As we have large potential for green energy application, we may participate with the world movement to reduce our large dependency on black energy (oil in particular) by developing more renewable energy utilization (geothermal, biofuel, hydro, etc) and practicing more energy conservation activities.
The coordination and responsibility in managing energy problems also need to shift or put them in balance.
The country’s energy management does not have to be the sole responsibility of the central government, but greater authority and operational works might be shifted to the regional/local one. These need large preparation, capacity building, and transfers of skill/knowledge from the heavy centralized regime to the more decentralized one.
Energy provision is not only the business of large state-owned companies, but also regional/local government’s companies and private sector.
The management of national energy does not have to be the responsibility, say the ministry of energy and mines which more focus on the supply side, but also the other sectors (transportation, industries, services, and households) representing the demand side who have to consume energy wisely.
For consumers a new paradigm needs to be introduced: that energy is not to be taken for granted. The availability of energy is a result of costly, long and hard works; energy is a precious resource but so far we have paid less than its economic values; our energy resources are depleting and becoming scarcer.  We have to adjust our new paradigms in dealing with energy.